Strategic Organizational Best Practices–Friend or Foe?

  |  October 5, 2016

Best practices can be a powerful tool to help organizations improve their marketplace performance, differentiate their business, and help functions become more effective and efficient. However, best practices can also cause the opposite. Essentially, the constant quest for industry best practices can, at times, actually lead to less differentiation, effectiveness or efficiency. How can a business know when an organizational best practice is a good fit?

In the end, best practices should enable an organization’s strategy and drive its differentiation in the marketplace. One of the easiest ways to know if a best practice is right for your organization is to see if it does just that. Sounds easy enough, right?

Although it sounds easy and should become easier as a business works towards strategic alignment, the allure of best practices can be much harder to validate against our strategy in real time. We see many companies periodically fall prey to a trap of best practices, and it is important to learn how to recognize when a best practice will deliver the best strategic value.

To do this, let’s first discuss why best practices are so attractive in the first place.

  • Everyone (people and businesses as a whole) have the desire to be and perform to the best of their capabilities. Who doesn’t want to be the best? This often drives people to assume that by implementing best practices this will inevitably result in the “best” organization possible.
  • Best practices provide a degree of comfort. How can an organization go wrong when it is composed of best practices? How can I or my department be blamed for choosing a practice that everyone in the industry is doing?
  • Similar to the point above, best practices also give a sense of career security. The rationale here is that if others in a certain position are successfully implementing a best practice, I must be right to do the same. How can anyone say that I am not doing my job when I am doing the same best practices that others in my position are doing?

While it is true that the three points above seem justifiable, it is important to note that best practices don’t guarantee any of the points above. This distinction is very important as we go back to our ultimate test: does the best practice drive the organization’s strategy?

Rather than guarantee that an organization will get ahead, best practices can help an organization increase market share and/or differentiate their offerings from their competitors only if the best practice(s) aligns with the organization’s strategy. What may have had a lot of traction with one organization may not work at another since their strategies and value propositions differ.

For example, consider how your company’s culture or viewpoints differ from a competitor. Best practices will react to different cultures and viewpoints differently. If the best practice doesn’t fit your workplace environment, it may be difficult to implement or may even cause more harm than good. What began as an assumed “sure way” to improve your organization could actually cause decreases in efficiency, less productivity, and heightened internal conflict.

Also, consider how implementing wide-spread best practices will affect your differentiation in the marketplace. If you and your competitors utilize the same best practices, you may trend to the mean rather than being unique and differentiated. In other words, the ubiquity of the best practice essentially causes less strategic distinctiveness and fails to set your organization apart from the competition. Will a certain best practice actually cause differentiation or reduce it?

This point was made forcefully in a recent call with a service provider. When the woman answered the phone, she immediately said, “Can you hold on a minute?”  I inquired if she was finishing work from a previous call and she said, “Yes.”  While my wait wasn’t too long, it did make me feel like my call, which was important to me, was just one more in a long line of calls this busy agent was expected to handle.  Clearly, the technology this organization had installed was designed to maximize productivity of the agents (a best practice), but it wasn’t necessarily customer focused.  If this service provider’s strategy was built on delivering great customer service, then a situation that caused the customer to wait for the agent could undermine that strategy.

So, what is the solution? Rather than rely solely on best practices to help organizations win in the marketplace, consider customized, differentiated processes that will drive a strategy and “up the game” in the market by creating practices that are perfectly matched to your unique marketplace position.

You might also consider whether there is a strong enough rationale to support a new process or best practice at all. Some work within an organization is necessary and cannot, in itself, drive competitive value. Where this is the case, it doesn’t make sense to develop a new distinctive process rather it may make sense to learn what others are doing and copy practices that will allow you to be at par with competitors. For much of the necessary work in an organization, maximizing efficiencies and a “good enough” attitude enables companies to divert their resources to more strategically differentiating activities rather than spend the time and money on best practices or customized processes that won’t deliver on their investment.

The bottom line for best practices is that organizations need to have clarity and sound logic around if and how a best practice will drive an organization’s strategy. There is no reason to overbuild an organization with best practices that will not fit the needs of their marketplace position, drive differentiation, or deliver strategic value as a result of a best practice investment. While best practices can be an amazing tool to improve overall performance, they are most effective when put in context with and in alignment with an organization’s strategy.

Should you include an industry best practice into your organization? What does your strategy say?

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